Homeowners associations are rapidly gaining in popularity in the United States. More and more homeowners are finding the security and ease of being part of a privately governed community appealing compared to the hassle of maintenance.
Perhaps your neighborhood is lacking an HOA community, or maybe it has always been your dream to start one. Whatever the case may be, you may be wondering how to start an HOA. Here are a few steps to get you started.
Educate Yourself on Local Laws and Procedures
The very first step you should take when looking to start an HOA is to educate yourself thoroughly on every topic relating to homeowners associations. This includes becoming knowledgeable about any rules and regulations, local laws, and legal steps that must be taken to successfully and legally form and operate an HOA. It is important to religiously follow these rules in order to form a solid community. Meet with other HOA owners for advice and read as much material as you can.
Get a Feel for Local Interest
It is also important to do the proper research in the community to see how much interest there is and what homeowners are looking for in your particular neighborhood. When starting out, making membership optional is helpful for garnering and keeping interest.
Consider Insurance Early
Many HOAs make the mistake of not insuring themselves properly. In the early stages of forming the business, it is important to gain protection for your HOA by investing in insurance that protects you from any number of eventualities.
Select a High Quality Team
The people that you gather together to collaborate in this new and exciting project will have a great deal of influence. Be sure to choose a small but strong core of people who have knowledge, skill, and compatibility with one another.
Develop a Reasonable But Competitive HOA
When designing CC&Rs, choosing amenities, and planning new structures, there is always a delicate balance between being competitive with other local HOAs, and keeping fees low enough to be reasonable. However, through trial and error, you will be able to determine what is truly important to the homeowners in your community, and develop an HOA which achieve both of these goals.
Establish the Business
Once you have a solid structure for your community, it is time to dive in and establish the business. Most choose to form an LLC. While establishing your business, you will be asked to provide a name for your business, pay fees, apply for a federal tax number, draft articles of organization, and establish bylaws, among other things.
Elect a Board
Once the business is established, it is time to elect a board. This is an extremely important task because the board will set the tone for the community in the future. Be sure to gather together a group of people that have strong people skill in various different areas. Search for people who are strong in finances, or have knowledge of landscaping or maintenance and who have a heart for the community.
Establishing an HOA can be an exciting time for you and your neighborhood. Follow these initial steps for how to start an HOA, and get a head start on the process.